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tv   Asia Edge  Bloomberg  May 18, 2014 11:00pm-12:01am EDT

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asia. home prices continue to decelerate. and north korea enters the tablet market. could this be a rival to samsung and apple? china very much on the downside. .hina's home prices rose evidence of the property impact in china. the hang seng also seeing declines. jakarta, malaysia, malaysian airlines down. malaysia reports gdp. thailand unchanged.
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off 5%. bjp's landslide victory. the most emphatic result in 30 years. this is a turning point. that is what everybody is saying. >> absolutely. we did see this huge landslide for modi over the weekend. the question is who will be part of his newly formed cabinet. government [indiscernible]
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one of the names that is doing the rounds is a former commerce minister. someone seen -- he is someone seen with experience. jaitley will most likely be named. the bjp in the election manifest referred to what it calls tax terrorism. international arbitration by legalthat can make the system as transparent as possible. it has been on the back burner long little -- for a very
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time due to political differences. quickly other key ministers. the deputy be manager welcoming the chairman of the national democratic alliance although it remains unclear whether he will be given the speaker's post of the lower house. that is what we are tracking. about modi himself? he has been making pronouncements that he is doing god's work. >> yeah, big statements coming out on sunday. series of victory rallies. to the statet where he has been the chief minister. when you saw him come to delhi where 25,000 people of his party
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alone gathered to see him. extremist religious leanings and his first agenda before politicking was to go [indiscernible] and clean it up. seen as a sacred place for hindus. him on that god put earth to a lot of work. some of it is dirty work that he is up to the task. >> we have been gauging reaction to the bjp's victory. of the largest private bank says -- >> the most important thing that they will look forward today is leading cap investments.
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in investments of the corporate productivet becoming , that is the first thing that the banking sector would look for. from dan o from capital economics asia. daniel martin from capital economics asia. >> this is one of the things that the government can tackle. in modi'snic riots state has some minorities worried about his rise to prominence. that a strong economy will help. the minorities and commence
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is something that has to be top of his agenda. but the feeling within the bjp seems that, if he can deliver on jobs and growth and development, rowsthink that the rising will -- rising votes will make both happy. think you will create minority specific programs. just half an hour away from the open in india. >> first of all, the futures market has seen a significant gain. you can see both those futures indices, soh of the
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keep a watch for those. they ran it on friday. they are going to run it today. coming on the promise of an economic recovery. he did very well in his state. that one stage in the entire country is a very difficult task. since you was put forward as a premise are candidates for the bjp, trends fell more than that, about 9.5%. we've seen significant gains on the rupee. the expectation of higher rates to go to do with higher inflation. look at that, jumping up. modiodi feeling, they impact, a gradual jump up.
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primee in about here as minister. we're seeing analysts from deutsche bank and others all raised their target on son sex -- on sensex by 50% each. >> the to get to the deepening maritime route between china and vietnam. beijing has evacuated thousands of its citizens following violent protests about a rig. two chinese people confirmed dead. there have been direct clashes that see.
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let's just talk about what exactly happened. is there any hope that this can be resolved peacefully? >> the standoff at sea is still very tense these days. four hours by boat just to get to that area. once you do, it is surprising to see so many boats out on the horizon. i was on the vietnamese coast for three days and we were chased i larger chinese boats on each of those days. chinese and the enemy's ships have been locked in a tense can mouse chase about 140 miles off of vietnam's coast since china hauled in this billion dollar expiration rig earlier this month. both countries claim territorial rights to these waters. both sides have called and boats to the area. chases are common. [sirens] this crash occurred last week as
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a boat got close to the rig. there was minimal damage but no one aboard was hurt. the chinese government said that boats have been rammed while legally protecting the rig's operation. a radar screen shows about 60 boats in the area, more than coast the vietnamese ships and fishing surveillance boats. chases like this when our daily experiences as both sides last horns and blair recordings ordering the other side to leave. vietnam coast guard vessel is about 70 miles from the chinese expiration rig. they have created three perimeter rings around the rate. the mission of this vote is to get close to the rig as possible. shiny's vessels get chased and this is exactly what is happened behind us today.
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while the two governments are locked in a diplomatic standoff, the turf battles at sea are likely to continue. >> thank you for that. >> let's look at some of the other stories making headlines. the long-run process in thailand is taking its toll. shrunk for the fourth quarter. more than two percent on quarter. thailand may slide into recession this year. germany's biggest bank is ahead ofg its finances a european stress tests later this year. raise $11 billion in fresh capital. almost a quarter of it will be by selling a stake to the guthrie royal family.
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a new bid is $170 million, if it succeeds, it will be the biggest ever acquisition of a u.k. company. pfizer says it is its final offer. another pay-tv merger the years, at&t has agreed to acquire directv. the deal has party been approved by both companies and is expected to close within 12 months. it will give at&t more firefight -- firepower as it takes on comcast and time warner cable for planning a merger of their own. >> doesn't it seem like everyone is launching tablet devices these days? later on, a look at the latest must-have device for a very exclusive clientele. next, big challenges ahead for india's next government. will get hsbc's view.
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>> indian markets have welcomed victory but will he be able to deliver? markets have done pretty well. where are we going to go from here? what are they going to look for and what is the timing if we see a correction in the indian market? >> the oldest rule in markets is you buy the rumor and sell the news and this is a classic sample of this. modi is a great guy with lots of expectations, but i don't think he can meet those expectations. >> before we had the exact full figures, the bjp was leading. yet last week, we saw -- win sincee biggest
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1984. is it just that they actually got a majority as a single party? >> i think that is the key point. you are not going to need 20 regional parties. you need also to compromises. that is what we will see in the next week or two. india is the most over own overownedbally -- market globally. what we've had in the last few months is a sort of defensive well-known sector, i.t. services, pharmaceuticals. so it will have to switch to the domestic demand sort of things, like utilities. >> what is the timing for that type of selloff? >> i think the selloff happens even today. and we we were up 3.5%
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ended up only 1%. what will happen today is the key. i think a lot of people will be looking to buy back in went to have a selloff because the story is a good one. i would maybe wait a couple of months. -- question is what enforced what foreign investors would fiscal see, tackling the deficit, reform. he is going to choose which areas he wants to fight his battles in. >> what happens to the rupee? the rupee at 50th, ok, up 10% or thereabouts, maybe more than that since it's lows last year. at what level does it become uncomfortable? >> we think it probably strengthens a little more in the short-term but it's probably getting quite close to an equilibrium so i wouldn't see a big move in the currency, to be honest. >> any expectations on how this will impact the relationship with the u.s. and how -- and what it means for some of the stocks that are?
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-- stocks there? how it will react to pakistan, which is a key u.s. ally in the region. >> the only thing that we know for sure is what he said about china, which is he is going to continue gesturing can ties. >> he's got a good track record if he gets things done. when there are blockages, he bangs heads together and things happen. but they haven't bought into his policy because frankly we don't know what it's going to be. >> trade between china and india is going to be ever more crucial looking ahead. and there is a lot of mistrust after the 62 or. >> what he knew it's -- what he needs is investment. seminars when you bring in foreign investments, i think if india is going to have a manufacturing industry, it has to have manufacturing -- it has
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to have investment. people are expecting that. to me, it's like the european union. you have 40 states or whatever. in one state, you can get things done. if you are running the central government in india, you need to have the states coming behind you and that is a much harder prospect. it has one of the honest populations in the world and that talent needs to be harnessed. >> i think inflation is the key issue. and happens between modi the reserve bank governor is going to be key. he is very much an inflation fighter. he is a bit like volcker was in the u.s. one suggestion i have heard is that -- is clearly worried about
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how tight money policy is and roger has no ax to grind. will there be some deal done between -- deal than between greenspan and clinton. key.will be >> check and balances that we were talking about earlier. stick around with us because we have a group discussion coming up in 20 minutes. afternext, six months back in the philippines to witness the rebuilding effort.
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the storm left millions homeless and took away their ways of making a living. bloomberg has been back to see how things are now. the family survived the disaster, but-high-end -- but haiyan took almost everything they owned. >> we cannot rely on it anymore
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because i will eventually run out. we have to start rebuilding our lives. >> she is one of the thousands who relied on the fishing industry, one of the main sources of income in the areas devastated by the storm. >the unit estimates that in just these provinces, but one of 5000 fishing boats were destroyed. and they forecast it will take at least another year to bring things back to where they were before. >> it is about the motors on the boat and the net. >> the whole supply chain. >> and about where they bring the fish, what they do about markets, what they do about refrigeration. extent year -- the sheer of the damage, the markets have and just as critical of the garments and the ngos. >> we needed to deploy lightly hold -- deploy livelihood. we gave then capital, including
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signage and rebuilding. it's about $200 for one store like this. able ton a month, i was sell about $100 worth of things. and now i can use some of that money to buy more merchandise to sell. the country's finance ministry estimates that nongovernment aid has so far $3 billion.pped organizations that are present in the region, where you see the philippines as a conduit of funds. this is something we hope to launch within the next month or so. is notany cases, it enough to simply give them fish or even teach them how to fish. giving them the tools to rebuild their lives.
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>> counting down to the opening session in mumbai. just minutes away. take a look at how the latest futures are indicating. gains from the session was friday when modi elected. look at sydney. flipping it over to the picture in soeul. call it a five session. here in hong kong, this is what the picture look like on this foggy day. you can see the hang seng currently trading off by about .4%.
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you are looking at the live view of victoria harbour. the home of the hong kong central business district. what we are talking about has been making headlines this morning. the worsening maritime dispute between china and vietnam. a higher calling in india. he is on a mission from god. and here's that thailand is slipping into technical recession. more on how talented mr. their gdp target. first -- more on how thailand missed their gdp target.
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first, the worst performers in asia. >> home prices falling, further evidence the property markets impacted. haderty stocks falling, we prices rising in a few cities a year and a half. yesterday on a sunday, it showed aat the margin is 56, dramatic decline. china merchants declining there. the stocks show you the concern. also the impact of the ratio going up. this is putting pressure on the asking banks to
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approve mortgages faster. of courseeason is home prices weakening for the month of april. >> only so much in terms of a prose that you can offer to lower these homebuyers before you really just have to kind of give up. let's turn our attention to japan because they are back from lunch break. any economic data diving sentiment? in two months,se coming in at 19% gain. creditven an eye on saison. shares have really been battered once again this morning. electron, they will be d listed on september 18 of this year.
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topping estimates. that is the reason why this company is saying gains. rounds up three examples of currencies. >> political gridlock is having a measurable impact on growth. they slump taking place. it is southeast asia's second-biggest economy. >> the fear is that thailand may be headed for recession. this is the first time in four quarters and we have seen the economy shrinking. it is largely due to the fact that these protests, the lyrical gridlock, continues to impact the country. first-quarter gdp contracting .6%. was for 2.2%timate
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contraction. we saw a 0.6% contraction. lookurth quarter of 2012, at that, 19% year on year growth. >> that's right. china is a -- thailand is a major exporter. you can see the major drop-off in terms of economic activity. revising its growth figures, i have those headlines right now. the government revising its 2014 gdp growth forecast to 1.5% to 2.5%. that is a very anemic rate of growth for thailand. the export forecast has also been fallashed. so it is hitting all areas of the economy. let's move from thailand to indonesia.
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widodo has picked kalla. it is expected that he should get about 44% of voter support. >> there has been no let up in china's property slowdown. after the government -- d property lenders to 44 out of the 70 cities, put that in perspective for us. >> new property data for china coming out sunday and what it is showing is a fairly alarming trend in china's property prices. on a month on month basis, there are now no cities in china where real estate is outperforming the returns you would get on the money market funds like alibaba. and only a handful of cities where prices are performing the returns you would get on a fixed
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term one-your deposit. what that means is that the speculators, the real estate sector is looking pretty unattractive. with speculative demand making up a big chunk of the total, what that suggests is that we could see a continued slump in real estate sales. >> what does this mean for china's overall growth story right now? this is pretty negative for chinese growth. thereal estate sector and knock on effects of the real estate sector is everything from steel to cement to furniture to home electronics, the biggest single driver of china's domestic demand. as sales slow, we have started to see construction of new residential property contract. this is a very negative sign for china's growth. it means that china's growth target for the year, 7.5% extension in gdp, looks pretty difficult to reach. >> what does beijing do? they have the levers in place.
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are a matter of when they going to pull the levers and why. >> that's right. encouraging china's commercial banks to ratchet up corporate lending. remain households relatively lightly levered so this seems like a pretty smart people's bank of china. hopefully that will encourage first-time buyers and prevent the slump in the property sector to go too much further. >> thank you for that. a range of homegrown devices are not exactly hurting samsung are apple, but they will allow some in the reclusive state to
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become a little more connected. ofnorth korea isn't the kind country to let something like a lack of internet access get in the way of a budding mobile device and history. byr tablets marketed separate countries are available in north korea and all were on display at the recent pyongyang international trade fair. sellingablets we are with a lot of applications, including a lot of literary and artistic works which are widely read by our people. and also the textbooks and reference books that help people study. tablets, theng tablet with tv function is the most popular. , the smallestt tablet includes a retro antenna, offering improved reception for state-run tv. access isnal internet restricted so use of these devices can only connect to north korea's own local internet. offers software strangely
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similar to microsoft. wo of the companies import software and modify it. the educational tablet we are developing and producing has an operating system adapted to our own style and useful applications. than 400et has more multimedia resources come including textbooks and reference books for primary and middle school and has the function of dictionary search, handling multimedia, and handling documents. it is just as capable as a computer. devices have been surprisingly well reviewed and at a mere $260 for the topple the line model, they are a bargain, but only for those not earning the average korean wage. hsbc's gary'sme, evans will be back on how to
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make money in a sluggish world.
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>> gary, we talked about india previously. let's move to one of the other countries in this part of the world, thailand. contraction of gdp taking place, political gridlock. what is your point of view? >> we are still cautious on thailand. investors picked up lessons from the past two years. political unrest in thailand, that is a time to buy equities. i think the problem this time is more serious. we don't have a government. >> people talking about this as being a transformation period. >> it's hard to see the light at
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the end of the tunnel. elections, the opposition will boycott again and we don't have a budget. i think this will rumble on a long time in thailand. now seems to be so appropriate for the emerging markets in asia. while many of them have attractive valuations, structurally, they are so unsound. how do you help your investors understand which markets are on the right track? >> it's a tough one. i don't think that period is over. i think there are some selected ones. the appetite among investors is in restructuring stories, india, right? on one ibo haven't focused enough, not in this region, but mexico. secondly, possibly china. if they can execute these soe reforms, china stocks are still cheap. front, thehina
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property prices from over the weekend, certainly, we were discussing this morning a cyclical perhaps downwards arrow -- downward spiral. homeowner confidence, people are not buying necessarily. how long does a cycle go before we see a change? isas far as the government concerned, keeping prices capped is their objective. if they can keep the economy is growing and real estate prices flat for a few years, that improves affordability. in the short term, they have to be concerned, how much does growth spur in the rest of the year? telling the rest of the banks to ramp up their mortgage lending. local authorities want to unwind some of the restrictions on the part of the banks. i think that is where we are. they are getting a little
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numbers on how fast prices are coming down. you allocating assets towards [indiscernible] or risk-heavy? >> number one, indonesia, which is very much like in india story but with still two months away from the election. number two would be china soe's. we have already had a big drop in the internet stocks in china. we probably got further to go. if we do see any signs of progress on soe's, their stocks are so cheap that they could do well. months ahead two of the elections, you are confident it won't turn into a debacle or sort of unrest, etc.? just like in india, you buy on the rumor. when he does get elected, then you start worrying about his ability to execute.
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but as the expectations go up, and if we hear today he is appointing kalla as vice president, that is a positive. >> do you buy financial stocks? >> in indonesia? financials do look quite attractive. >> there is a lot of wealth. >> there is a lot of banks. >> more bank accounts than in bangladesh. >> but some are likely for consolidation. >> you've got banks are micro-lending on the whole making nice returns. naturist -- net interest margins are still pretty high in indonesia. future.esia has a great in 10 years time, it still has a great future. >> is not whether the marketer countries go to our bad, but moving in the right direction. indonesia still has a lot of
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problems. it is a very poor country. >> infrastructure is still the key problem. >> it will take much to push indonesia in the right direction. it was eight to 10 years under spy. if you can create more infrastructure and make it open for investment. >> it seems like japan was one of those markets last year. so far, investors seem to have lost so on any of the structural reforms. what do you tell your clients? >> i am underweight on japan. if we look at the money that went in last year, it was $180 billion. so far this year from only $13 billion has come out. everyone is sitting on a position that has lost. it has underperformed in 12 months. >> why? >> they'll hope it's going to get better.
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the banks are going to do more or the government is going to deliver on these [indiscernible] waiting and waiting and waiting. and the arrow has not been shot yet. , any typek of japan of visa was not going to happen until spring, perhaps 2015. >> she changed her view to that a couple of weeks ago. they cut their growth forecast but they didn't cut the inflation forecast. they are being much too optimistic about inflation. i think that is good to be a disappointment. everyone is inspecting jew -- expect -- everyone is expecting june or july when the government is when to do more. they will tear their hair out saying what are we supposed to do because they have a government that isn't playing ball effectively. >> it is now up to the
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government. the third arrow, the optimist will tell you it is not a third arrow so get a new weapon. it's a thousand different needles. i just don't see it happening. everyoblem is that country has vested interest to prevent change happening in japan is a very good example. it strikes me perhaps it is easy to make changes in indonesia or india in some ways, even with all of the separate voices feeding into the indian process. do you think that is the case? is athink japan culturally very consensus-driven society so that makes it particularly hard to change anything. but i don't think it's that different. political scientist will tell you, if there is a reform which 95% of the population will benefit mildly but 5% will lose
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out, the reform won't happen because they will fight tooth and nail to stop it from happening. every country, that is the same story. the u.k., she did that but she did her real reforms in the second term. if it hadn't been for the falklands war, she would not have reached that. >> gary evans from hsbc journey sunday. >> looking at asia and its intention with the west. need a kremlin-backed multimillion dollar investment fund when "asia edge" returns.
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sensex uplook at the
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.1% -- almost 1%. let's look at the biggest gainers. it looks like indian stock investors agree with the nation's voters. bank of india of post 3%. all those stocks gaining in the indian session. hisladimir putin begins two-day trip in china tomorrow. he will have a look at the investment opportunities in store. thank you for joining us. before we come to any specifics, china has now become hugely more important to russia after sanctions by the west and also events in ukraine and that crisis continuing. all, china has always been important. china has been an important partner.
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we formed the china fund a year and a half ago to invest much growthd benefit from the in china. tomorrow, we'll will be announcing some new investments that are very important. one of them for example is the first ever reach between russia and china that will connect us and it will allow lots of resources. >> i can't believe there are no bridges between russia and china. >> it will allow us to export lots of things to china. is --s is something which vladimir putin will be meeting with his counterpart tomorrow in shanghai. what are they going to talk about? >> investment is definitely going to be a big topic. russia-china fund will have a $1 billion investment jointly and allow us to bring about $5 billion total investment because of banks from -- because of investment from banks and other partners.
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logistics is a big sector, agriculture, we will be announcing deals about tourism because the tourism infrastructure is going to grow. so lots of resources as well. we believe they committee between chief government people and key business people because it can be more and does this and government discussing the deal and opportunities. >> how badly tarnished is russia's image in your view? >> we believe there is a lot of information that has been put out there that is not correct. i think knowledgeable investors actually understand that russia is an attractive opportunity. in st. petersburg, we will have some of the leaders of the top foreign will find representing three julie dollars coming -- $3
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trillion coming to discuss different things. we believe the sanctions are not sustainable because business is very much against sanctions. the world has many more problems based on smaller difficulties. sanctions are increased, it could really hurt the growth of the world economy. i think there are some consequences. 90% of the capital we raise our from arab countries and asian countries. but we believe that sanctions really are not achieving what they were supposed to achieve. focus should be more on ukrainian situation. we see that many people in ,urope etc. basically say that even in russia, sanctions are encouraging people to be much stopinward looking and liberal reforms are so much needed. the sanctions are actually not really hurting that much but
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increased sanctions would be bad for the world economy and not achieve their objective. is somethingergy that the russian economy is very dependent on. do you think it is overly dependent on it? >> definitely, there is a need to increase other sectors. that's why we put $3.8 billion in sectors such as health care and movie theaters and logistics. we have been investing on a lot of -- in a lot of sectors outside. and thinking about china market is a good way of doing it. living400 million people , much more within two hours of prime time from moscow. so it is a move to consider asian opportunities. >> thank you for joining us. we want to thank you for watching wherever you turned in
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-- you tuned in from around the world. have a great monday.
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